The consequences of public employment: evidence from Italian municipalities

Marta Auricchio (), Emanuele Ciani, Alberto Dalmazzo () and Guido de Blasio
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Marta Auricchio: Bank of Italy
Alberto Dalmazzo: University of Siena

No 1125, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We investigate the consequences of public employment on local economies. We start by presenting a spatial-equilibrium framework, to highlight that the housing market is an important channel through which a variation in public employment affects private employment. We then provide empirical evidence from Italian municipalities, focusing on the strong contraction in the public sector workforce that occurred between the last two Censuses (2001-2011). We use an IV identification strategy that exploits the fact that variations in local public employment were strongly influenced by central government decisions, with little reference to the economic conditions of the municipalities. Our results suggest that exogenous contractions in public employment lead to an increase of private jobs, and that competition in the housing market seems to be a relevant explanation for this finding.

Keywords: local labor markets; public employment (search for similar items in EconPapers)
JEL-codes: J45 J60 R12 (search for similar items in EconPapers)
Date: 2017-07
New Economics Papers: this item is included in nep-eur, nep-geo, nep-lma and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1125_17

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